Correlation Between Edible Garden and Nxu

Can any of the company-specific risk be diversified away by investing in both Edible Garden and Nxu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Edible Garden and Nxu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Edible Garden AG and Nxu Inc, you can compare the effects of market volatilities on Edible Garden and Nxu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Edible Garden with a short position of Nxu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Nxu.

Diversification Opportunities for Edible Garden and Nxu

0.35

Correlation Coefficient

Edible Garden  Nxu

Weak diversification

The 3 months correlation between Edible and Nxu is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Nxu Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nxu Inc and Edible Garden is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Edible Garden AG are associated (or correlated) with Nxu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nxu Inc has no effect on the direction of Edible Garden i.e., Edible Garden and Nxu go up and down completely randomly.

Pair Corralation between Edible Garden and Nxu

Given the investment horizon of 90 days Edible Garden AG is expected to under-perform the Nxu. But the stock apears to be less risky and, when comparing its historical volatility, Edible Garden AG is 2.74 times less risky than Nxu. The stock trades about -0.08 of its potential returns per unit of risk. The Nxu Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  27,150  in Nxu Inc on October 5, 2024 and sell it today you would lose (27,053) from holding Nxu Inc or give up 99.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Edible Garden AG  vs.  Nxu Inc

Edible Garden AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nxu Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nxu Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Nxu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edible Garden and Nxu

The main advantage of trading using opposite Edible Garden and Nxu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Nxu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nxu will offset losses from the drop in Nxu's long position.

The idea behind Edible Garden AG and Nxu Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.